Tuesday, November 19, 2019
The Internal Revenue Service (IRS) announced on November 6th the 2020 inflation adjustments for several tax items including the estate and gift tax exclusions and standard deductions. The current individual estate tax exclusion amount is $11.4 million, but for a person that passes away in 2020, the amount has increased by $180,000 to $11.58 million. The 2020 exclusion amount for married couples is twice that at $23.16 million. Taxpayers who are considering substantial lifetime gifts must “use or lose” the additional exemption before it reverts back to pre-2018 amounts in 2026.
One item that did not change is the annual gift tax exclusion, which is to remain at the 2019 amount of $15,000. But the annual gift tax exclusion amount for a US citizen to gift their non-citizen spouse increased by $3,000 to $157,000. If both spouses are citizens, there is no limit, and the gifts are excluded from federal estate and gift tax.
Also, the IRS increased the standard deduction to $12,400 for individual taxpayers and married taxpayers filing separate returns and to $24,800 for married taxpayers filing jointly. For heads of households, the standard deduction will increase to $18,650.
See Estate and Gift Tax Exclusions Increase to $11.58 Million in 2020, Hodgson Russ, November 18, 2019.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.